Vasily Kudrin, Chief Investment Officer of Lybrion, talks on perspectives of digital organizations and digital corporate governance at the “Adaptability of audit, control and corporate governance: challenges, transformations and prospects” conference.
Coherent exposition of the presentation
1. Convergence of Trends. Vasily Kudrin opens by addressing the increasing convergence between blockchain technology and traditional corporate governance, identifying it as a major trend for the coming year. He links this trend directly to the rise of decentralized autonomous organizations (DAOs). The speaker defines these entities as legitimate organizations whose activities fit classical organizational standards. Mr. Kudrin emphasizes that the crypto industry should no longer be viewed in isolation from the mainstream economy.
2. Industry Scale. The the speaker provides concrete data to illustrate the maturity and scale of the crypto market and notes that daily trading volumes surpassed half a trillion dollars in May, equating to roughly one-sixth of the global Forex market’s turnover. These figures signal the industry’s transition from a niche phase to a significant economic trajectory. He argues that it has already evolved into a substantial mega-sector poised to encompass the entire economy within a decade.
3. Distorted Perception. Mr. Kudrin talks on errors of the mainstream media’s coverage, that is skewed toward scandals and regulatory conflicts rather than substantive development. The expert points to the frequent focus on issues like exchange collapses or inter-agency disputes instead of analyzing the industry’s real evolution. The professional deems such discussions futile, as the crypto industry develops orthogonally to traditional state and legal systems. This creates a gap between the public narrative and the market’s actual state.
4. Instructive Failures. The expert analyzes the collapse of FTX (exchange) and the Terra ecosystem as case studies in systemic risk. In FTX’s case, assets were allegedly backed by its own token, leading to an instant crash and multi-billion dollar losses. That Terra incident revealed that its founder retained centralized control, even having the ability to halt the blockchain. Vasily Kudrin concludes that these events demonstrate an acute need to import competencies from traditional corporate governance and compliance.
5. Need for Expertise. From these failures, Mr. Kudrin derives a key argument: sustainable market transformation requires professionals from the governance field. He asserts that implementing corporate governance, control, and risk management standards would enable more stable and predictable development. The speaker stresses that technical innovation alone is insufficient without fundamental financial and economic knowledge. This combination is crucial to mitigate the types of risks that led to major project collapses.
6. Genesis of DAOs. Transitioning to decentralized organizations, Mr. Kudrin traces their conceptual origins to the open-source movements of the 1990s and platforms like GitHub. He notes that later, social networks and, ultimately, blockchain projects like Bitcoin and Ethereum provided the technical and social foundation for DAOs. The expert highlights that many such projects, including Ethereum, Chainlink, and TON, were created with significant contributions from Russian-speaking professionals. This evolution led to the recognition that formal decision-making structures were needed within network communities.
7. Nature of a DAO. Vasily Kudrin provides a clear definition: a DAO is an organization existing solely on the blockchain via smart contracts, without a traditional legal entity. Yet, it is a fully functioning commercial entity that creates value and possesses market capitalization. The professional offers a stark example: during the market downturn in February-March, the capitalization of such digital organizations remained in the billions of dollars, while shares of major traditional companies plummeted to hundreds of millions. This proves their tangible economic significance.
8. Network (Blockchain) Governance. The speaker details the governance mechanisms, where hierarchy is replaced by network interaction through forums and token-weighted voting. Participants (stakeholders) vote by staking their tokens, and decisions can be either self-executing via code or strategic in nature. Mr. Kudrin emphasizes that community opinion carries decisive weight here, and ignoring it leads to an exodus of participants and capital to competing networks. Thus, power is distributed, and decision legitimacy stems from the direct will of token holders.
9. Risks Inherent to Growth. The expert states that the market for decentralized organizations is growing exponentially, accompanied by a multiplication of risks. He again references FTX, Terra, and Celsius as indicators of this volatile development phase. Mr. Kudrin argues that this context makes the implementation of conscious corporate governance practices not merely desirable but a necessary condition for further sustainable growth. The term “digital corporate governance” becomes fully applicable to these network-based corporations.
10. Fundamental Distinction. Vasily Kudrin highlights a key distinction of digital governance: its focus is on network interaction, not hierarchical command. In this model, excessive control concentration in one or two individuals, as with Terra, leads to catastrophic outcomes and erodes trust. An organization’s success depends on accounting for community sentiment, as participants can easily “vote with their feet” by migrating to other networks. This creates a unique dynamic where power inherently belongs to the network.
11. Economic Perspective. Vasily Kudrin shares a forecast that by 2030, approximately half of the economy could become digital. He observes that risk management and compliance professionals have been slow to transition into this sphere, although demand is already forming, especially from centralized exchanges (CEXs) and regulatory advisory firms. The speaker sees this as a significant window of opportunity for specialists possessing the relevant expertise.
12. The People/State Paradox. The expert points out a major imbalance: while Russian-speaking professionals have created roughly one-third of the global crypto industry and the community holds an estimated 12-15% of crypto assets, the domestically regulated segment in Russia remains minuscule. Mr. Kudrin attributes this to contradictory state actions over the past five years. This paradox, in his view, limits the country’s ability to leverage its competitive advantages, such as climate conditions for mining and a pool of talented developers.
13. Required Competencies. The speaker specifies the exact knowledge the crypto industry needs from traditional managers: finance, economics, psychology, sociology, and an understanding of existing standards (e.g., for risk management). He notes that the industry often starts from scratch, disregarding humanity’s accumulated body of managerial knowledge. Integrating this experience, according to Kudrin, is critical for the civilized development of the sector.
14. Developing Standards. As a key prospect, Mr. Kudrin identifies the development of specialized digital corporate governance standards. He predicts the emergence of professional communities dedicated to this task in the coming years. Although attempts have already been made (particularly in the U.S.), the expert believes the timing for their widespread adoption is only now maturing. These standards will need to adapt classical governance principles to the unique networked environment.
15. Corporate Blockchains. A separate growth avenue is the development of private and hybrid blockchains being built by traditional corporations. It is here, Vasily Kudrin believes, that specialists who understand both crypto-assets and traditional corporate governance systems are especially in demand. Their role is to act as a bridge, ensuring the effective integration of new technologies into existing business processes.
16. Audit Evolution. Mr. Kudrin indicates the necessity of developing sophisticated audit functions that move beyond narrow technological code reviews. A holistic audit is required, providing a complete picture of an organization’s operations and tracking trends in distributed ledger technology (DLT). As technologies evolve—giving rise not only to new blockchains but also cryptographic protocols like zk-STARK—auditors must continuously update their knowledge base.
17. Next-Gen Protocols. The speaker explains the essence of innovative protocols, such as zero-knowledge proofs (zk-STARK), which allow verification of an operation’s correctness without revealing any information about the validator. This represents the next step in enhancing privacy and trust within digital systems. Mr. Kudrin references Vitalik Buterin’s suggestion that such technologies may eventually replace aging forms of blockchain.
18. Practical Application. As an example of real-world blockchain application, Mr. Kudrin cites the electronic voting system used in the country for two electoral cycles. He notes that such technologies can minimize problematic elements in voting procedures. Furthermore, the expert sees potential for applying similar principles not only in state governance but also in corporate governance, for instance, in shareholder voting processes.
19. Value of Professional Collaboration. In conclusion, Vasily Kudrin summarizes the discussed technological and managerial trends as the foundation for a new discipline—digital corporate governance. He explicitly invites the audience to engage in discussion and collaboration within this field. The speaker emphasizes that this domain presents significant opportunities for professionals willing to combine traditional expertise with an understanding of decentralized technologies.
Regulation of crypto
2022, April – What can change the law on the regulation of cryptocurrencies? Vasily Kudrin, Partner, Investment Director at Lybrion, the international group, helped to sort out the question.
– Over the past two months so many events have taken place in the crypto industry of Russia that the matter of state legalization is not very interesting and waited for. In the medium term, cryptocurrencies may become the most popular assets for settlements, for many economic sectors, including IT. At the same time, the fiat risks becoming an alternative form of money.
– I assume that the process will be organized in the same way as for other areas of licensing in the financial sector. At the same time, it is necessary to implement instant licensing with the most favorable criteria for access, including the possibility of integrating decentralized autonomous organizations (DAOs). For the most useful effect, the process should resemble the authorization of the first partakers in the starting blockchain ecosystems.
The state, unfortunately, dragged out the discussion on the development of the crypto-assets sphere for 3-5 extra years, so it missed a lot of opportunities. Any delay is no longer interesting to anyone. Russian participants in the crypto segment, even those who are physically located in Russia, have hundreds of options for growth.
– The chosen direction and work will not bring tangible positive moments and will not fix former issues. However, the design of a legal framework will help solve new problems associated with the pressure of other states, large economic agents and dependent centralized services. At the same time, I am sure that Russian crypto community will cope with this without the state’s assistance.
The state itself needs help and professional advice, as well as active assistance from the most high-level experts and organizations in the crypto industry. But I do not rule out that the dialogue on such support may also be difficult due to the lack of interest on the part of experts. Also, the situation can be aggravated by the gap in business and humanitarian values between statesmen and crypto enthusiasts.
Government agencies and regulators need to significantly accelerate in adopting the most favorable norms in this mega-segment of the economy. Also, regulators need to quickly implement tools for integrating traditional systems in modern digital, rather than paper, formats. This includes:
- digital ruble;
- remote registration in all services;
- instant licensing;
- support of services for tethering crypto to the MIR fiat payment system;
- organization of mining for reserves to back the digital ruble, etc.
In the current times, these matters require activation within days, not months. Otherwise, the country will miss valuable opportunities, leading to losses and weakening state institutions.
– Many participators of the crypto community already act “in the shadows”. I think that if restrictive and tough measures are embedded, it is the state systems, and not the representatives of the crypto industry, who will face problems. Investors may only fear short-term volatility, which is unlikely to lead to a depression in the international crypto market.
Now state legal systems are mainly considered (by them), rather, merely as one of the secondary elements of the rapidly developing financial and economic paradigm. (Source: BeInCrypto (rus))